Synopsys Posts Financial Results for Fourth Quarter and Fiscal

Synopsys Posts Financial Results for Fourth Quarter and Fiscal Year 2024

Forward-Looking Statements
This press release and the investor conference call contain forward-looking statements, including, but not limited to, statements regarding short-term and long-term financial targets, expectations and objectives including, among others, our long-term financial objectives, which include the anticipated effects of our pending acquisition of ANSYS, Inc. (the Ansys Merger); business and market outlook, opportunities, strategies and technological trends, such as artificial intelligence; planned acquisitions and their expected impact, including the Ansys Merger; the potential impact of the uncertain macroeconomic and geopolitical environment on our financial results; the expected impact of U.S. and foreign government trade restrictions and regulatory changes, including export control restrictions and tariffs on our financial results; customer license renewals and the expected realization and timing of our contracted but unsatisfied or partially unsatisfied performance obligations (backlog); planned dispositions and their expected impact; customer demand and market expansion for our products and our customers' products; our ability to successfully compete in the markets we serve; our planned product releases and capabilities; industry growth rates; software trends; planned stock repurchases; our expected tax rate; and the impact and result of pending legal, regulatory, administrative and tax proceedings. These statements involve risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in such forward-looking statements. Such risks, uncertainties and factors include, but are not limited to: macroeconomic conditions and geopolitical uncertainty in the global economy; uncertainty in the growth of the semiconductor and electronics industries; the highly competitive industry we operate in; actions by the U.S. or foreign governments, such as the imposition of additional export restrictions or tariffs; consolidation among our customers and our dependence on a relatively small number of large customers; risks and compliance obligations relating to the global nature of our operations; failure to complete the Ansys Merger on the terms described in our filings with the SEC, if at all; failure to obtain required governmental approvals related to the Ansys Merger or the imposition of conditions to such governmental approvals that may have an adverse effect on us; failure to realize the benefits expected from the Ansys Merger; and more. Additional information on potential risks, uncertainties and other factors that could affect Synopsys' results is included in filings we make with the SEC from time to time, including in the sections entitled "Risk Factors" in our latest Annual Report on Form 10-K and in our latest Quarterly Report on Form 10-Q. The financial information contained in this press release should be read in conjunction with the consolidated financial statements and notes thereto included in Synopsys' most recent reports on Forms 10-K and 10-Q, each as may be amended from time to time. Synopsys' financial results for its fourth quarter and fiscal year 2024 are not necessarily indicative of Synopsys' operating results for any future periods. The information provided herein is as of December 4, 2024. Synopsys undertakes no duty to, and does not intend to, update any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law.

SYNOPSYS, INC.
Unaudited Consolidated Statements of Income ⁽¹⁾
(in thousands, except per share amounts)


	Three Months Ended		Twelve Months Ended
	October 31,		October 31,
	2024	2023	2024	2023
Revenue:
Time-based products	$ 834,375	$ 780,725	$ 3,224,299	$ 3,016,256
Upfront products	520,939	441,494	1,802,222	1,400,125
Total products revenue	1,355,314	1,222,219	5,026,521	4,416,381
Maintenance and service	280,672	245,164	1,100,915	901,633
Total revenue	1,635,986	1,467,383	6,127,436	5,318,014
Cost of revenue:
Products	216,485	197,540	770,238	697,686
Maintenance and service	91,707	76,043	367,055	287,876
Amortization of acquired intangible assets	66,831	12,598	107,996	45,281
Total cost of revenue	375,023	286,181	1,245,289	1,030,843
Gross margin	1,260,963	1,181,202	4,882,147	4,287,171
Operating expenses:
Research and development	554,818	465,815	2,082,360	1,849,935
Sales and marketing	219,225	186,953	859,342	724,934
General and administrative	172,032	102,271	568,496	376,677
Amortization of acquired intangible assets	4,086	3,346	16,238	9,295
Restructuring charges	—	(1,348)	—	53,091
Total operating expenses	950,161	757,037	3,526,436	3,013,932
Operating income	310,802	424,165	1,355,711	1,273,239
Interest and other income (expense), net	12,077	(20,400)	158,147	32,231
Income before income taxes	322,879	403,765	1,513,858	1,305,470
Provision (benefit) for income taxes	62,084	60,409	99,718	90,188
Net income from continuing operations	260,795	343,356	1,414,140	1,215,282
Income from discontinued operations, net of income taxes	834,825	3,139	821,670	2,843
Net income	1,095,620	346,495	2,235,810	1,218,125
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest	(18,486)	(2,695)	(27,570)	(11,763)
Net income attributed to Synopsys	$ 1,114,106	$ 349,190	$ 2,263,380	$ 1,229,888

Net income attributed to Synopsys
Continuing operations	$ 279,281	$ 346,051	$ 1,441,710	$ 1,227,045
Discontinued operations	834,825	3,139	821,670	2,843
Net income	$ 1,114,106	$ 349,190	$ 2,263,380	$ 1,229,888

Net income per share attributed to Synopsys - basic:
Continuing operations	$ 1.81	$ 2.28	$ 9.41	$ 8.06
Discontinued operations	5.43	0.02	5.37	0.02
Basic net income per share	$ 7.24	$ 2.30	$ 14.78	$ 8.08

Net income per share attributed to Synopsys - diluted:
Continuing operations	$ 1.79	$ 2.23	$ 9.25	$ 7.91
Discontinued operations	5.35	0.03	5.26	0.01
Diluted net income per share	$ 7.14	$ 2.26	$ 14.51	$ 7.92

Shares used in computing per share amounts:
Basic	153,916	151,972	153,138	152,146
Diluted	155,991	154,845	155,944	155,195

(1) Synopsys' fourth quarter of fiscal year 2024 and 2023 ended on November 2, 2024 and October 28, 2023, respectively. For presentation purposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter.

SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets ⁽¹⁾
(in thousands, except par value amounts)

	October 31, 2024	October 31, 2023
ASSETS:
Current assets:
Cash and cash equivalents	$ 3,896,532	$ 1,433,966
Short-term investments	153,869	151,639
Total cash, cash equivalents and short-term investments	4,050,401	1,585,605
Accounts receivable, net	934,470	856,660
Inventories	361,849	325,590
Prepaid and other current assets	1,122,946	548,115
Current assets of discontinued operations	—	114,654
Total current assets	6,469,666	3,430,624
Property and equipment, net	563,006	549,837
Operating lease right-of-use assets, net	565,917	559,923
Goodwill	3,448,850	3,346,065
Intangible assets, net	195,164	239,577
Deferred income taxes	1,247,258	853,526
Other long-term assets	583,700	444,820
Long-term assets of discontinued operations	—	908,759
Total assets	$ 13,073,561	$ 10,333,131

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued liabilities	$ 1,163,592	$ 1,059,914
Operating lease liabilities	94,791	79,832
Deferred revenue	1,391,737	1,559,461
Current liabilities of discontinued operations	—	286,244
Total current liabilities	2,650,120	2,985,451
Long-term operating lease liabilities	574,065	579,686
Long-term deferred revenue	340,831	150,827
Long-term debt	15,601	18,078
Other long-term liabilities	469,738	381,531
Long-term liabilities of discontinued operations	—	33,257
Total liabilities	4,050,355	4,148,830
Redeemable non-controlling interest	30,000	31,043
Stockholders' equity:
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding	—	—
Common stock, $0.01 par value: 400,000 shares authorized; 154,112 and 152,053 shares outstanding, respectively	1,541	1,521
Capital in excess of par value	1,211,206	1,276,152
Retained earnings	8,984,105	6,741,699
Treasury stock, at cost: 3,148 and 5,207 shares, respectively	(1,025,770)	(1,675,650)
Accumulated other comprehensive income (loss)	(180,380)	(196,414)
Total Synopsys stockholders' equity	8,990,702	6,147,308
Non-controlling interest	2,504	5,950
Total stockholders' equity	8,993,206	6,153,258
Total liabilities, redeemable non-controlling interest and stockholders' equity	$ 13,073,561	$ 10,333,131

(1) Synopsys' fiscal year 2024 and 2023 ended on November 2, 2024 and October 28, 2023, respectively. For presentation purposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter.

SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows ⁽¹⁾
(in thousands)

	Twelve Months Ended
	2024	2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 2,235,810	$ 1,218,125
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation	295,065	247,120
Reduction of operating lease right-of-use assets	97,273	97,705
Amortization of capitalized costs to obtain revenue contracts	73,587	82,190
Stock-based compensation	692,316	563,292
Allowance for credit losses	19,724	19,932
Gain on sale of strategic investments	(55,077)	—
Gain on divestitures, net of transaction costs	(868,830)	—
Amortization of bridge financing costs	33,677	—
Deferred income taxes	(407,649)	(211,045)
Other	(1,295)	13,295
Net changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	(103,460)	(178,432)
Inventories	(51,449)	(123,752)
Prepaid and other current assets	(410,432)	(106,396)
Other long-term assets	(168,255)	(100,618)
Accounts payable and accrued liabilities	187,564	170,496
Operating lease liabilities	(96,966)	(73,281)
Income taxes	(73,215)	198,078
Deferred revenue	8,641	(113,435)
Net cash provided by operating activities	1,407,029	1,703,274

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and sales of short-term investments	138,961	130,435
Purchases of short-term investments	(136,821)	(131,079)
Proceeds from sales of strategic investments	55,696	8,492
Purchases of strategic investments	(1,293)	(435)
Purchases of property and equipment, net	(123,161)	(189,618)
Acquisitions, net of cash acquired	(156,947)	(297,692)
Proceeds from business divestiture, net of cash divested	1,446,578	—
Capitalization of software development costs	—	(2,204)
Net cash provided by (used in) investing activities	1,223,013	(482,101)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt	(2,607)	(2,603)
Payment of bridge financing and term loan costs	(72,265)	—
Issuances of common stock	232,212	252,986
Payments for taxes related to net share settlement of equity awards	(337,541)	(241,408)
Purchase of equity forward contract	—	(45,000)
Purchases of treasury stock	—	(1,160,724)
Other	(1,096)	(122)
Net cash used in financing activities	(181,297)	(1,196,871)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	8,797	(2,979)
Net change in cash, cash equivalents and restricted cash	2,457,542	21,323
Cash, cash equivalents and restricted cash, beginning of year, including cash from discontinued operations	1,441,187	1,419,864
Cash, cash equivalents and restricted cash, end of period, including cash from discontinued operations	3,898,729	1,441,187
Less: Cash, cash equivalents and restricted cash from discontinued operations	—	4,947
Cash, cash equivalents and restricted cash from continuing operations	$ 3,898,729	$ 1,436,240

(1) Synopsys' fiscal year 2024 and 2023 ended on November 2, 2024 and October 28, 2023, respectively. For presentation purposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter.

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